Mention a Virtual Dedicated Server and many people will struggle to explain what one is let alone the advantages of one. (This problem is further exacerbated by the fact that they can also be referred to as a VDS, a Virtual Private Server, or a VPS).
However, most people are familiar with the concept a dedicated server; a computer that you share with no one else; to which you have root or superadmin access and can install on it whatever software you what and can reboot it at any time.

The benefits of a dedicated server are clear when compared to shared web hosting; no sharing it with other users' websites to slow down your website(s), no dodgy websites sharing your IP address, having the ability to install your own SSL certificate for e-commerce and the generally higher level of security that comes with having your own server rather than the traditional shared web hosting where you may be one of hundreds sharing a server.

The major downside to a dedicated server is simply one of cost; all that speed, security and exclusivity comes at a relatively high price.

Wouldn't it be great if there was a compromise where you had most of the benefits of a dedicated server but much less of the cost?

Well there is: that where a virtual dedicated server comes into its own.

Essentially, what we do here at Intrahost is take a well-specified dedicated server, the HP ProLiant DL360 G6, and install the VMware virtualization software on it. This software enables the creation of a number of separate virtual servers on this one computer. Each one of these virtual servers can run its own different OS i.e. Windows or Linux, each can reboot individually as needed, each user has root access to the virtual server so you can install the software that you want on your virtual server.

Perhaps most most importantly, unlike shared web hosting (the most common kind), each virtual server has a guaranteed share of the resources of the underlying physical server, i.e., CPU processing time, RAM, hard disk space, and even bandwidth. Just like a dedicated server you can be sure that when you need them the resources that you have paid for are ready and waiting for you. Thus, each virtual server is prevented from hampering the performance of another virtual server on the same host machine.

Security of a virtual dedicated server or VPS is like that of a physical dedicated server. Each virtual server is separate for the others and even if a VDS on your physical server were hacked your VDS would remain untouched.

The cost benefit? Here at Intrahost a Virtual Dedicated Server is available for around a third of the cost of Dedicated Server. Direct comparisons are difficult because of the many options available but suffice to say that the existence of VDSs means that many more businesses, web designers and their customers can enjoy the benefits of a dedicated server without the substantial monthly overhead.

Someone asked me why, instead of creating a VDS, didn't hosting companies buy less powerful and cheaper servers so that customers could have a server each instead of sharing one physical server as several VDSs?

There are two main reasons: firstly, that approach would still produce an expensive dedicated server rental because that low-powered dedicated server would still cost the hosting company the data centre's rackspace rental and power charges but those would fall on the just the one dedicated server owner. Whereas, by buying and virtualizing big powerful servers the hosting company will face the same data center rackspace and power costs but those would be now shared by more users and so the monthly rental per user comes down substantially.

Secondly, the more expensive servers used as VDS host machines are far more technologically advanced, powerful and greener than the cut-price, end-of-line, cheap dedicated servers offered by many companies based outside the UK and EU. However, the capital cost of the top-of-the range servers is again shared by a number of VDS clients which keeps the cost down per user when compared to funding the capital cost of even a relatively cheap web server by one user.